To create the perfect business plan, include these five elements.
Your first pitch to investors is likely to shake you up. As you pitch your business idea to more investors, you will get better. Over time, however, the quality of your pitch is likely to lose its edge. Your business plan, however, will continue to make strong impressions, provided you create a killer plan. This guide will help you do that.
1. Follow the basic structure
Consider the context in which your business plan will be read; it doesn't make sense to change a lot in the basic format. Investors are very clear on what they're most interested in, and it is not in your best interests to create a plan that deviates from that format and is hard to navigate. Follow the basic structure and include the following elements:
- A cover letter
- Title page
- Table of contents
- Executive summary
The cover letter is the traditional short explanation of why you are contacting the recipient. The title page should have your business's name, the founders' names, logo and product images (optional), and, of course, the phrase "business plan." The table of contents acts as a navigation aid for readers and is followed by the content of your business plan.
2. Treat the executive summary as a pitch to the busiest investor
Not all investors you approach will give you that elusive face-to-face meeting. In the absence of influential references, your business plan needs to do the talking, at least to get investors interested. At some stage, you will have to rely on email, and that's where your business plan's executive summary comes into play.
Investors are incredibly busy. If they are interested in your idea, they will only spare five minutes to read the executive summary. Therefore, treat it with importance. I'd suggest writing the executive summary last so you include only the most crucial details and create a crisp pitch. I recommend reading The Balance's guide to writing a killer executive summary.
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3. Submit a detailed marketing plan
A marketing plan is essentially the heart and soul of your business plan. It's critical if this is your first business and you have no previous experience or reputation to back you up. Social media plays an important role in your plan, provided you set proper goals and KPIs from the outset. Your marketing plan should cover every aspect of marketing for your business, including:
- Detailed information governing how your product line was created, what the pricing mix is, what your promotions strategy is and estimated sales
- Your positioning strategy for your products, the branding strategy, and customer segmentation and targeting plans
- Who the top competitors for your business are, alternatives for your key products, along with how you plan to combat these challenges
- For product-focused businesses, include product augmentation and product line expansion plans
Moreover, you need to use proper tools to complement your marketing strategies. Email validation tools like Zero Bounce and marketing automation tools like Pardot are some common services that every business should use.
4. Be vocal about your assumptions
Every business plan makes some well-informed assumptions, for instance, about:
- The purchasing behaviors of certain consumer groups
- Trends in government regulations that impact businesses in a particular geography
- Interest rates and the ease of obtaining working capital
- Increases in the cost of human resources
- The total number of working days for the business in a year
Of the assumptions you include in your plan, mention the ones that might not be obvious. This has two benefits. First, it demonstrates to your investors that your numbers are research-based and not mere guesses. Second, if any of the assumptions don't pan out as expected, you have the plan to go back to in order to explain deficits in performance.
5. Include lucid financial details
Too many entrepreneurs assume they can throw in advanced financial analyses and extrapolations and get investors onboard. Remember, the deeper you delve into financial analyses before getting your business off the ground, the more skeptical your investors are likely to be. That, however, does not undermine the importance of the financial information you include in your plan. Focus on:
- Crisply explaining your plan to procure working capital
- Offering a pessimistic as well as optimistic extrapolation of revenues and margins based on data from the last two years
- Highlighting any historical sales spikes linked to cyclical or special expensive marketing events
- Explaining your plan to manage cash flows
- Listing your disaster management plan to demonstrate that you can be relied upon to fulfill your responsibilities to investors
Before you finalize your business plan, incorporate the time-tested and proven effective suggestions offered in this guide.